Freed by 50

At the beginning of 2019 I set out a number of goals for my financial life.  Over the course of the year I hit some goals, added some, and changed some.  Lets take a look back and see how I did.

2019 Goals

1. Maximize ESPP Contribution – Status: Complete – This was one of my minor goals that hurt a bit at first.  Having 15% of one’s gross pay taken off the top of every paycheck on top of 401k, medical, dental, taxes, social security, medicare, and FSA is a bit much, but it is very much worth it.
2. Max Out 401k Contribution – Status: Complete – This amounted to a 1% increase after my raises took effect in January.  
3. Increase Emergency Fund to 6 Months Expenses – Status: Complete – Using my February ESPP money I was able to increase our big emergency fund to $36k, which covers an average six months of spending.  We also still have the $2500 “Oh shit” fund, and our cash fund for true emergencies.
4. Get Mortgage Below $350k – Status: Incomplete – We were well on our way to meeting this goal when the downturn in mortgage rates happened.  Rather than sending a lump sum to the mortgage to lower my principal, I diverted the funds to pay the closing costs on a refinance.  More on this later.

Setbacks

My house is approaching 30 years old and this seems to be about the time that anything that hadn’t been previously replaced needed replacing.  There’s still more to do, but I think we did more than enough for one year.

1. Pool Liner – $4200 – After six years of owning this pool, I’ve replaced or updated virtually every major component.  I don’t want to hear from the pool again for the next 20 years.
2. Finished Basement – $37,000 – This had been planned from the time we moved into our house.  This greatly improved livability and should pay dividends in peace and quiet when the kids are old enough to be down there alone.  Plus, when the kids move out (someday way off in the future), this can easily be converted into a large apartment.  Many people have asked why I didn’t “Just do it myself.”  This took four highly skilled professionals six weeks between plumbing, wiring, building, painting and everything else.  Had I just done this myself, it would be finished in 2030 and I would be out every night and weekend from here to there.
3. Driveway – $3000 – This was money I probably didn’t have to spend, but my driveway was starting to look a lot like my lawn, and my snowblower was tearing up big chunks of loose asphalt.  If this survives the winter I’ll consider it money well spent.
4. Windows – $17,000 – This was money I didn’t want to spend at all.  When I was trying to figure out where all the drafts were coming from one day, I walked from window to window with a lit candle and on numerous occasions, gusts of wind from outside blew the candle out through closed windows.  The real catalyst was that my daughter’s room was the worst offender and it was routinely 5-8 degrees cooler than the rest of the second floor.  This is another part of the house I never want to hear from again.  I find it odd that this was another project that numerous people have suggested I could have done myself.  It took four professionals almost two days to complete the job and they used equipment that I don’t own.  My neighbor did his windows himself, two years later he paid a professional to replace his siding and another to remove the mold beneath the siding after his window job leaked everywhere.

Changes

1. Home Refinance – While I didn’t succeed in getting my mortgage below $350k, I did lower my interest rate by 1.25%, which is a 28% drop from 4.35 to 3.15.  I also shaved four years off of the loan, by going from 24 years remaining to a 20 year loan.  And this will save $98k in interest over 20 years if I only make the minimum payments.  Plus, my payment only went up by about $18.  My secondary mortgage goal for 2019 was to get on a path to paying more principal than interest on my loan.  With my previous loan, I would have had to get the principal down into the $280k range or wait to 2027 for this to happen naturally.  Now I’m paying more principal than interest already.
2. New (old) car – I replaced my leased car with a truck I bought outright.  This will save me about $400/month and add all the versatility of a pickup truck to our lives.  There are pro’s and con’s to this move, but from a pure financial standpoint, this saves $4800/year.